Kurds win dismissal of seizure order on oil tanker off Texas

8/26/2014

Kurds win dismissal of seizure order on oil tanker off Texas

LAUREL BRUBAKER CALKINS

HOUSTON (Bloomberg) -- The Kurdistan Regional Government can bring $100 million of crude ashore in Texas after a U.S. judge threw out a court order that would have required federal agents to seize and hold the cargo for the Iraqi Oil Ministry until a court there decided which government owns it.

U.S. District Judge Gray Miller in Houston said he lacked authority under federal laws governing property stolen at sea to decide the dispute. Both Iraq’s central government and the regional government claim control of 1 MMbbl of Kurdish crude waiting in a tanker moored in international waters off the Texas coast for almost a month.

Miller ruled Aug. 25 that Iraq’s national oil ministry lost control of the crude when the Kurdish government pumped it without authorization from oilfields in the northern part of the country. Iraq failed to convince Miller that the oil was misappropriated when it was loaded into a tanker in the Mediterranean Sea after being pumped across Turkey in an Iraq-owned pipeline.

“Kurdistan’s unauthorized export of oil over land -- and later overseas -- may violate Iraqi law, but it does not violate U.S. maritime law,” Miller said.

Miller threw out a seizure order issued July 28 by a Houston magistrate judge, who questioned U.S. jurisdiction in the matter while agreeing to store the cargo onshore at Iraq’s expense as the debate continued in that nation’s Supreme Court.

Reparations, Royalties

Kurdistan officials have been fighting the national government over billions of dollars in unpaid war reparations and royalties from oilfields owed by the central government. Attorneys for Iraq’s Oil Ministry had said the only way they could force the Kurdistan Regional Government to appear before the Iraq Supreme Court was to seize the disputed cargo in the U.S.

Phillip Dye, a Houston attorney for the Iraqi Oil Ministry, didn’t immediately respond to phone and email messages after regular business hours seeking comment on the ruling.